This watchdog blog, by journalist Norman Oder, offers analysis, commentary, and reportage about the $4.9 billion project to build the Barclays Center arena and 16 high-rise buildings at a crucial site in Brooklyn. Dubbed Atlantic Yards by developer Forest City Ratner in 2003, it was rebranded Pacific Park Brooklyn in 2014 after the Chinese government-owned Greenland Group bought a 70% stake in 15 towers. New York State still calls it Atlantic Yards. Note: archive at right.

A major investigation of the EB-5 immigration visa program by Reuters, Special report: Overselling the American dream overseas, turns up numerous reasons for skepticism and an admission by a principal of the New York City Regional Center (NYCRC) that potential investors have been lied to about the Brooklyn Arena and Infrastructure project.

Astonishingly, however, the NYCRC's George Olsen gets away with blaming immigration brokers in foreign lands--in this case, Korea, not China--rather than acknowledging, or being forced to acknowledge, that the same statements have been made, in documents and on video, by the NYCRC itself.

In South Korea

Reuters reports:

At a recent seminar in Seoul, an agent for the Kookmin Migration Consulting Co., working on behalf of the New York City Regional Center, told would-be investors if they invested in the company's latest project their permanent green cards were "guaranteed." He also implied the investors would be financing the construction of the new home for the New Jersey Nets NBA basketball team.

In a subsequent interview with Reuters, George Olsen, managing principal of the New York City Regional Center acknowledged the claims were "not accurate" - the investors will finance the rebuilding of a rail yard and some related infrastructure near the new basketball court -- and promised he would jump on Kookmin "with two feet."

"But that's what's frustrating," Olsen said. "You can't be at every seminar, you can't be at every meeting, you can't be in the room when one of these people is talking. To raise $100 million, you have to get 200 investors. That's a lot of people. So there's a certain amount of mass marketing that has to go on. And once you get into that realm, it's hard to control."

Oh, come now. The same statements have been made by the NYCRC's Gregg D. Hayden in China, as I've documented. Here's my FAQ, and here's a report, with video.

"The project itself involves three components," Hayden said (at 1:33) in a webcast, excerpted below. "The Brooklyn arena; the related infrastructure to the lands; and the redevelopment and expansion and upgrading of the [city's] third largest transportation hub, in Brooklyn, called the Atlantic Terminal."

"The first major advantage is that the approval process, from USCIS, having already been accomplished, takes all of the immigration risk out of the process for the EB-5 investor," Hayden claimed in a webcast (below) at 1:00. "[O]ur job creation, which is the focus of getting the condition removed in two years, is so extremely certain with this approval process from USCIS," he continued, at 4:25.

Government involvement

Reuters reports:

The agent from Kookmin, for instance, said during the Seoul sales presentation that the government of New York state was involved in the rail yard project. Olsen said that claim was inaccurate as well.

But such claims get made over and over again -- especially outside the United States.

And they get made by the New York City Regional Center.

It looks like the Empire State Development Corporation's Peter Davidson, who joined the NYCRC in China, was a convenient prop. Reuters reports:

Still, the visits by high-profile politicians, including sitting state governors, continues, encouraged by the overseas promoters.

"We ask them to invite their government officials," said Hong Yu, a project manager based in Florida for the Wailian Overseas Consulting Group, which, like Maslink, works to find investors for the program. "That's very important ... to the Chinese people. Chinese people think, 'OK that project is government supported.' ... It feels safer."

But the impression is utterly false. Bentley, the USCIS spokesman, is unequivocal on the point: Just because a business has been designated as an approved EB-5 investment "does not mean that the projects are government-backed or guaranteed."

From my report

The NYCRC portrays the "Brooklyn Arena and Infrastructure Project" as funded, in part, by city and state contributions and suggests government agencies are partners in the job-creation effort.

The page below left from the project brochure is headed "Government Support" (according to a translation I commissioned), with the first line stating, "Different levels of government agencies have already approved the key components of the project."

However, that refers to the overall Atlantic Yards project, given that the "Brooklyn Arena and Infrastructure Project" did not exist at the time.

The second page of the brochure states that the NYCRC, along with the city and state governments, "join hands together" to announce the project. (The brochure is embedded in full below.)

Neither the city nor state government is a formal partner with the NYCRC in the project as presented to the Chinese investors. Each has made previously-funded subsidy commitments.

In an NYCRC project video presented in China to potential investors, the narrator states, "The New York City Regional Center is pleased to offer EB-5 investors another secure, job-creating project in conjunction with the government of both the state of New York and the city of New York."

The term "in conjunction with" is vague, though it could leave the impression of a formal partnership.

Similarly, in the opening of an EB-5 event in Beijing, as shown on this video, Hayden saluted Chinese partners by saying, "For the State of New York, for the City of New York, and on behalf of all of us in New York, we appreciate your strong efforts." That also could leave the impression of partnership.

Later in that event, he said, "As you saw in the [official project] video, we have very generous support from the governmental agencies of New York City and New York State; specifically, in the video, you heard [Mayor] Michael Bloomberg talk about job creation and how important it is to New York City."

However, government agencies have not invested in the regional center, and Bloomberg was talking about job creation for the Atlantic Yards project as a whole.

Conflict of interest

The Reuters report also touches on the issue of conflict of interest for attorneys, an issue I've explored:

Another big problem with the program: The attorneys the immigrants rely on as they navigate the EB-5 maze in the United States are often deeply conflicted, accepting commissions from the businesses they steer the immigrants to. It's a practice the lawyers do not always disclose and one that may violate U.S. securities laws.

The essential argument

Here's the core of the investigation:

Over the past two decades, thousands of immigrants have been burned by misrepresentations that EB-5 promoters make about the program, both inside and outside the United States. Many have lost not only their money but their chance at winning U.S. citizenship.

"I always tell the people who approach me that the EB-5 investment program is a risky business," said Brian Su, a Springfield, Illinois-based immigration consultant who publishes a popular blog on the program. "If you cannot bear the loss, the total loss of your investment, don't play this game."

But those risks are downplayed by almost everyone involved in the program -- including the USCIS itself. Chris Bentley, the agency's spokesman, for instance, said "the overwhelming majority" of EB-5 investors and their dependents go on to qualify for permanent resident status. An analysis of USCIS's own data, however, suggests that's not true. Nearly half the immigrant investors who won EB-5 visas during its 20-year history have failed to obtain permanent residency.

The rise in recent years of an unregulated industry paid to fill the EB-5 pipeline with rich foreigners has only added to the dangers. The U.S. businesses the immigrants are now steered to -- by firms like Maslink and by U.S. immigration attorneys -- are often the ones paying the highest commissions, not the ones offering the best investments, according to the industry insiders who spoke to Reuters.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY.
So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:if market-rate construction is delayed, will the affordable h…

Real Estate Weekly, reporting on trends in Chinese investment in New York City, on 11/18/15 quoted Jim Costello, a senior vice president at research firm Real Capital Analytics:
“They’re typically building high-end condos, build it and sell it. Capital return is in a few years. That’s something that is ingrained in the companies that have been coming here because that’s how they’ve grown in the last 35 years. It’s always been a development game for them. So they’re just repeating their business model here,” he said.
When I read that last November, I didn't think it necessarily applied to Atlantic Yards/Pacific Park, now 70% owned (outside of the Barclays Center and B2 modular apartment tower), by the Greenland Group, owned significantly by the Shanghai government.
A majority of the buildings will be rentals, some 100% market, some 100% affordable, and several--the last several built--are supposed to be 50% market/50% subsidized. (See tentative timetable below.)Selling development …

As I've written, Mayor Bill de Blasio sure knows how to steer and spin coverage of his affordable housing initiatives.

Indeed, his latest announcement, claiming significant progress, came with a pre-press release op-ed in the New York Daily News and then a friendly photo-op press conference with an understandably grateful--and very lucky--winner of an affordable housing lottery.

To me, though, the most significant quote came from Deputy Mayor Alicia Glen, who, as the Wall Street Journal reported:
said public housing had been “starved” of federal support for years now, leaving the city with fewer ways of creating affordable housing. “Are we relying too heavily on the private sector?” she said. “There is no alternative.”
Though Glen was using what she surely sees as a common-sense phrase, it recalls the slogan of a politician with whom I doubt de Blasio identifies: former British Prime Minister Margaret Thatcher, a Conservative who believed in free markets.